Economist El-Erian: The US is likely to face double-digit inflation by the summer

Federal Reserve Chair Jerome Powell is facing a difficult decision, and economist Mohamed Ellerian said the United States will probably face double-digit inflation by this summer. Sunday.

“Inflation is high and what’s happening in Ukraine will make it even higher,” said El Elian, chief economic adviser to Allianz, about CBS’s “Face the Nation.” ..[Powell] You have to make a choice. “

This means that Powell can “brake” by raising interest rates. This allows you to “regain confidence but risk a recession” or “take a break” by increasing inflation. Next year. “

He predicts that the US will “probably be very close or above 10% before we get off,” as inflation is already at 7.9%. Impact of income loss.

“That’s why it’s important to avoid a recession,” he said. “We can’t avoid stagflation, low growth, and highs, but we can certainly avoid a recession and recover quickly.” ..

El Elian also agrees with Treasury Secretary Janet Yellen’s predictions.

“There will be at least 12 months of unpleasant inflation that wasn’t in the 70’s and 80’s,” he said. Especially hard gas. “

He added that the United States is in this situation because the Federal Reserve is “very slow” to react.

Earlier this month, Goldman Sachs predicted the Fed would raise rates seven times this year, Street reported, but El Elian said he didn’t think the economy could support the event.

“We are in this ridiculous situation. Last week, when this 7.9% inflation occurred, the Fed was still putting liquidity into the economy. This is how inconsistent this policy was. I feel it. “

Meanwhile, there are political steps that can be taken to curb inflation and wage losses, but they are stuck in parliament, El-Erian commented.

“There is more we can do to increase labor force participation to reduce wage pressure. It is to facilitate childcare and people’s return to the workforce. More things we can do to increase productivity, and what we can do to supply bottles. More to get rid of the bottleneck. The administration has policies. Many of them are currently stuck in parliament. “

According to El-Erian, supply chain bottlenecks also arise, especially as China sticks to the “Zero Corona Policy” through the blockade.

“They will make a continuous blockade that will have a spillover effect on us. We can be in a good home, but we live in a really tough neighborhood so we can respond quickly. It’s important. We can’t fall. We’re lagging behind policy again. “

El Elian said the country must also be careful not to create another wave of inflation due to unfixed inflation expectations, El Elian said, explaining that it is caused by wage demand.

“It’s basically a simple story,” he said. “I’m an American worker and I’m looking for compensation for past inflation. If I can’t trust the policy makers, I’ll ask for compensation. Future inflation. If that happens, we have that terrible wage and price cycle. “

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